Conviction Amidst Headwinds

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Dear Investors and Friends,

2025 proved to be a year of contrasts for our flagship strategy. The Ajeej MENA Fund (AMF) ended the year essentially flat at +0.4%. This performance unfolded against a deeply bifurcated regional backdrop: while the MSCI Arabia NR returned 7.1%, its largest constituent, Saudi Arabia (representing over half the index), slid -12.8%.

The AMF benefitted from positive returns on stocks exposed to Dubai and the UAE’s population and economic growth, including Salik, Parkin, DEWA, Emaar, and FAB, as well as Saudi financial and industrial exposures.  This was offset by negative contributions from some of our longer-term convictions, namely Talabat in the UAE (see below) and certain exposures in Saudi including insurance and IT names.  The MSCI Arabia NR index’s headline growth was driven primarily by Kuwait and Dubai, which gained 21% and 17% respectively, as well as by Abu Dhabi banks which outpaced the Abu Dhabi market’s 6% return. The smaller MENA markets of Egypt, Morocco, Jordan, and Oman also had a strong year and contributed in aggregate nearly 2% of the 7% index return – the first two markets benefitted from an additional tailwind from USD weakness during the year. While some markets and stocks did not perform as well as we anticipated during 2025, the variation in performance helped to provide fertile ground for building high-conviction, long-term allocations.

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Conviction Amidst Headwinds

As a benchmark-agnostic fund, our performance often reflects the timing of our deepest convictions. In 2025, this was most evident in Talabat. Following its underwhelming December 2024 IPO, we moved against the grain, consistently adding to our position as the stock retreated.

We spent much of the year stress-testing our thesis, specifically regarding the entry of Keeta (owned by Meituan). The prevailing market consensus is that Keeta will aggressively erode Talabat’s profitability. We fundamentally disagree.

The market’s bearishness is largely an inference drawn from Keeta’s entrance into Saudi Arabia, where it significantly impacted Jahez, as well as from its track record in its home market. We believe these comparisons are flawed for several reasons:

• Market Dominance: Unlike Jahez, which was never the primary leader in its market, Talabat commands a dominant 60% to 80% share across its operating territories.
• Operational Depth: Jahez remains a monolithic restaurant-delivery operator. In contrast, Talabat has successfully diversified into vertically integrated and more sophisticated revenue streams.
• The "Stickiness" Factor: The Keeta playbook, driven by heavy discounting and used to great effect in Hong Kong, has struggled to translate to the GCC. While effective at attracting shorter-term bargain hunters, it has found it much more difficult to convert the sticky, profitable user base that defines Talabat’s ecosystem.

While we anticipate some margin compression as these markets mature, our confidence in Talabat’s long-term top-line growth remains steadfast. We view the current market scepticism as a disconnect between short-term noise and long-term fundamental strength.

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